‘How SMEs can overcome funding challenges’

ALTHOUGH small and medium scale enterprises face a lot of funding issues but these are surmountable with strategic planning by the entrepreneurs, experts have said.

Speaking at 5th annual Young Entrepreneurs Network held in Lagos recently, a cross-section of experts advised entrepreneurs on steps they need to take to overcome funding challenges facing their businesses.

According to these experts, business owners need to keep proper records of their transactions and operations, as such records would be required to support their loan applications whenever it becomes inevitable.

Speaking at the forum, Head, Women Banking Unit, Access Bank, Ms. Titilola Familoni, said that lenders approved loans based on statistics or information available to them.

This, she said, was in line with the requirements of the Central Bank of Nigeria.

Familoni further advised the entrepreneurs to put in place the right structure in businesses, as proper accounting shows seriousness on the part of the business owner.

She said banks asked for collateral for loans because it was a requirement of the CBN.

“Entrepreneurs need to get their records right as such would help them in accessing funding from banks. When the records are right, no bank can say no to a loan request,” she said.

She also emphasised the need for entrepreneurs to invest in staff training. This, she observed, would help prepare employees for challenges they may face in the business.

“You do not need to reinvent the wheel. See what other entrepreneurs have done and learn from that. Such experience will help speed up your growth and development,” she noted.

The statement further quoted Familoni as explaining that entrepreneurs did not need to be in hurry to grow their businesses without doing proper homework.

She said, “Entrepreneurs need to know how banks think. Banks do not like funding a customer’s risk. A bank will ensure that it is protected from whatever risk that lending to a customer carries. Equity is important in business. A customer desirous of a loan needs to have a savings culture.”

She added, “Entrepreneurs need to prepare themselves before approaching a bank for a loan. Preparation makes the borrower to approach the bank from superiority point of view and he will get the loan.”

The banker, however, said Access Bank was already exploring ways to assist entrepreneurs to realise their goals.

This, she said, was being done through identifying and solving of challenges that affect their businesses.

She, however, reiterated the need for SMEs to structure their businesses properly, saying such would make funding attractive to banks.

“We have discovered that many SMEs have no business plans and are owned by one person who does all the work and usually has no business plan; this has to stop if they want a bank to take them seriously, especially when it comes to giving out loans,” she explained.

Familoni gave the assurance that the bank would ensure proper training on basic cash flow forecasting and analysis skills for customers in order to overcome the challenges that come with faulty reports.

“Most times, people think that banks can just jump in and finance a business. But our approach is different. We need to first know and understand what the customer is doing before giving out loans. Remember that the money belong to the depositors and has to be protected,” she said.

The founder, HealthPlus Limited, Mrs. Bukky George, was also quoted as saying that entrepreneurs also had to ensure that their products contribute to common good and also build a brand that lasts.

According to her, entrepreneurs also need to prepare their successor to ensure they have the right workers that can handle sensitive roles within the company.